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HMRC internal manual

Double Taxation Relief Manual

Switzerland: double taxation agreement, Article 18: Pensions

(1) Subject to the provisions of paragraph (2) of Article 19, pensions and other similar remuneration paid to an individual who is a resident of a Contracting State, shall be taxable only in that State.

(2) Notwithstanding the provisions of paragraph (1), a lump sum payment derived from a pension scheme established in a Contracting State and beneficially owned by a resident of the other Contracting State shall be taxable only in the first-mentioned State.

(3) Contributions made by or on behalf of an individual who exercises employment or

self-employment in a Contracting State (‘the host state’) to a pension scheme that is recognised for tax purposes in the other Contracting State (‘the home state’) shall, for the purposes of:

determining the individual’s tax payable in the host state; and

determining the profits of his employer which may be taxed in the host state;

be treated in that State in the same way and subject to the same conditions and limitations as contributions made to a pension scheme that is recognised for tax purposes in the host state, to the extent that they are not so treated by the home state.

(4) Paragraph (3) applies only if the following conditions are met:

(a) the individual is subject to the legislation of the home state in accordance with the Agreement on the Free Movement of Persons signed on 21 June 1999, between the Swiss Confederation on one side and the European Community and its Member States on the other side; and

(b) the individual was not a resident of the host state, and was participating in the pension scheme (or in another similar pension scheme for which the first-mentioned pension scheme was substituted), immediately before he began to exercise employment or self-employment in the host state; and

(c) the pension scheme is accepted by the competent authority of the host state as generally corresponding to a pension scheme recognised as such for tax purposes by that Stae.

(5) For the purposes of paragraphs (2), (3) and (4);

(a) the term ‘a pension scheme’ means an arrangement in which the individual participates in order to secure retirement benefits payable in respect of the employment or self-employment referred to in paragraph (3);

(b) a pension scheme recognised for tax purposes in a Contracting State if the contributions to the scheme would qualify for tax relief in that Sate and if payments made to the scheme by the individual’s employer are not deemed in that State to be taxable income of the individual.